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The iShares Nasdaq Biotechnology ETF (NASDAQGM: IBB) , the largest biotech exchange traded fund by assets, fell 1.5% and was testing both its short- and long-term support at the 50-day and 200-day simple moving averages, respectively.
Biogen said an independent committee found the trials for the experimental Alzheimer's drug, aducanumab, were unlikely to succeed, the Wall Street Journal reports.
The announcement sent BIIB shares plunging 29.0% Thursday, erasing about $18 billion from Biogen's market value. BIIB makes up 7.9% of IBB's underlying holdings. Meanwhile, over the counter market shares of Eisai Co (ESALY) plummeted 33.0%.
The findings raised further questions over the viability of the hypothesis that has informed much recent research into potential Alzheimer’s drugs. Specifically, many hypothesize that the buildup in the brain of a sticky substance called Beta amyloid is a critical factor in the disease.
“This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience,” Biogen Chief Executive Michel Vounatsos said.
The proposed aducanumab drug targeted the sticky tangles with the aim of slowing or stopping Alzheimer's, but drugs that have focused on this process have so far failed.
The failure of the studies for aducanumab “should be the final nail in the coffin” for the hypothesis, Baird analyst Brian Skorney said in a research note titled, “The Death of Beta Amyloid—Where Do We Go Now?”
Other prominent drugmakers have already stepped away from Alzheimer's research due to the prominent failures. For example, Pfizer Inc. said last year that it would stop its developments in Alzheimer’s and Parkinson’s disease drugs and lay off 300 employees working on the research.
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